The software option can keep your cash in check

You'll benefit from packages that help to sort out your home finances, says Nick Clayton

It is never too early to start organising your finances. You do not have to wait for the big three annual calendar reminders: the end of the tax year in April; 30 September, the last date when the Inland Revenue will work out the tax owing on self- assessed income; and the end of January, the cut-off point for tax returns.

It is never too early to start organising your finances. You do not have to wait for the big three annual calendar reminders: the end of the tax year in April; 30 September, the last date when the Inland Revenue will work out the tax owing on self- assessed income; and the end of January, the cut-off point for tax returns.

Of course, anybody who pays all their income tax through their employer has nothing to worry about except their credit card bills, investments, bank accounts, loans and - well, maybe everybody has a reason to get their finances in order.

Computer software packages can help bring order out of chaos. Most also have useful hand-holding functions that take users through the initial tasks of entering data.

Choosing which package to buy, however, is confusing. There is no point in getting something capable of running a corporate payroll, calculating VAT and amortising plant and equipment if all you want to do is track your household bills.

Probably the simplest and most popular package is Microsoft Money. For people whose finances are not too complex it is ideal. Set aside a couple of hours, and gather every current financial document representingyour income and outgoings. It is a scary process; fortunately you only need to do it once. Many of the figures do not change from month to month, others change only occasionally and many banks and credit companies allow you to download your statements straight into Money. It is worth checking whether your bank offers this facility as there are some surprising omissions. For instance, the internet-only institutions Egg, Smile and Cahoot do not provide accounts in a downloadable format.

Quicken provides many similar features and attracts a loyal following. At its full price, the basic package, Quicken XG Suite, can seem expensive - £70 against £50 for the equivalent version of Money. But it is currently being heavily discounted.

For these prices, Quicken and Money include modules to help you work out your income tax on investments such as share dividends or interest; if any of your income is from self-employment you probably need something a little more powerful. The main additional function needed is usually one for invoicing, but small business accounting also involves elements such as VAT, financial modelling and payroll. Prices also start to rise steeply.

Two companies dominate the small business end of accountancy software, Sage and Intuit - the publisher of QuickBooks.

Accountants and bookkeepers will feel most comfortable with Sage, but QuickBooks is more colourful and user-friendly. And there is MYOB;the program has been around long enough to mean there is little danger of being left with an unsupported package.

Any of these packages will help. But think carefully before you make your choice as changing can be time-consuming.

FACT FILE WHAT'S ON OFFER

* Microsoft Money

Established way of keeping track of household finances. Lacks the functions to run a small business. Windows PCs only. From £22.29.

* Quicken XG

Main competitor to Microsoft Money. More online services, but most run out after a year. Some complaints about customer service. Windows PCs only. From £26.39.

* Sage

The favourite for anybody running a small business but can be daunting for people less well-versed in bookkeeping jargon. Windows PCs only. Price: from £90.30.

* QuickBooks

Easier to use and provides a wide range of reports for small business but some say it lacks flexibility. Mac or Windows.

Price: from £119.95.

'I use it to track all my finances

Glyn Simpson started to use Microsoft Money nine years ago. Now 35, and married with a two-year-old child, Mr Simpson, left, says: "I use it to track all my finances: my bank accounts, mortgage and some investments. I spend an average, I suppose, of about half an hour a week on it."

Such is his enthusiasm for the program that he says he would not use a bank with an internet service that did not support it. "I am with NatWest and can download directly into Money. I can use it to forecast how much money I'm going to have at the end of the month. It would take longer if I couldn't download it.

"It does require a little discipline, but it really is useful to see all my financial information at a glance, including what bills are coming up and how long it is going to take me to pay off my mortgage."